Kerrisdale Capital, with $283 million under management, generated 3.37% performance in February after experiencing its largest loss in history in January, -5.94%.
Kerrisdale Capital’s strong numbers
The long / short fund has a three year annualized return of 50.61%, versus 14.32% for the S&P 500 (INDEXSP:.INX), and a 860.51% cumulative return since inception, versus 123.31% for the S&P 500.
Kerrisdale Capital and Herbalife
The fund found itself involved in the Carl Icahn / Bill Ackman Herbalife Ltd. (NYSE:HLF) dispute in March, as it confirmed its investment and said it would hold its 230,000 share position, a 4.9% weighting in the portfolio, as the Federal Trade Commission investigated the firm. Sahm Adrangi, founder and chief investment officer of Kerrisdale, takes a similar view with Dan Loeb of Third Point Management when considering Herbalife’s international operations as a buffer against US regulatory concerns, where it is impossible for US regulatory reach to shut down Herbalife’s operations.
In terms of industry exposure, Kersdale is in diversified financials (15.4%), household and personal products (11.6%), transportation (11.5%) and insurance (11.1%). The fund is primarily long (124%) with a smaller short ratio (-21%), while it is primarily exposed to large cap stocks (65%).
Kerrisdale Capital: Morgan Hotels fight
Kerrisdale is engaged in a activist fight to break up Morgans Hotel Group Co. (NASDAQ:MHGC). “That Kerrisdale would propose the liquidation of Morgans prematurely and categorically, would rob Morgans’ stockholders of the value that rightfully belongs to them and further highlights Kerrisdale’s self-serving motives,” Morgan’s board said in a letter to investors, calling Kerrisdale’s proposal “reckless” and saying it “weakens the Company’s hand in negotiations with counterparties.”
In aggressive and personal attack on Kerrisdale, the letter said: “Sahm Adrangi’s campaign is emblematic of someone with zero public company experience. His unqualified slate of colleagues and cronies shows the obvious lack of interest by serious industry professionals from wanting to associate themselves with Mr. Adrangi, his fund and history of PR campaigns. Kerrisdale’s slate lacks crucially important lodging industry, real estate and capital markets experience, and has no basis on which to properly or credibly evaluate Morgans’ fair market value.”
Kerrisdale’s top holdings include AMERCO (NASDAQ:UHAL) (10.3%), Jones Lang LaSalle Inc (NYSE:JLL) (6.8%), JGWPT Holdings Inc (NYSE:JGW) (5.8%), Genomma Lab Internacional SAB de CV (BMV:LABB) (OTCMKTS:GNMLF) (5.4%) and Sberbank Rossii OAO (MCX:SBER) (OTCMKTS:SBRCY) (5%).